$100 Billion Price Tag For Y2K Fix: Computer Bug Repair Sets Peacetime Record (Washington Post via S.F. Chronicle)

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Yes... but IS IT fixed?


$100 Billion Price Tag for Y2K Fix
Computer bug repair sets peacetime record
Rajiv Chandrasekaran, Washington Post
Thursday, November 18, 1999
)1999 San Francisco Chronicle


[Fair Use: For Educational/Research Purposes Only]

U.S. businesses and government agencies are spending about $100 billion to keep the Year 2000 glitch from crashing their computers, making a simple two-digit programming ``bug'' the most expensive peacetime catastrophe in modern history.

But the vast electronic repair effort -- which has commanded an unparalleled mobilization of people, money and executive attention in the last two years -- likely won't slow the surging U.S. economy, the Commerce Department predicted yesterday.

Comparing Y2K to ``a tangled shoelace for a world-class marathon runner,'' the department also forecast that any problems created by malfunctioning computers, either domestically or overseas, won't significantly affect the U.S. economy.

Across corporate America, Y2K repairs have produced staggering bills. General Motors Corp. has said it could spend as much as $626 million. Exxon Corp. has earmarked $250 million; Procter & Gamble Co. expects to shell out $90 million; and the federal government has estimated its costs at $8.4 billion.

The Commerce Department's $100 billion estimate covers the cost of testing and repairing computers affected by the Y2K problem from 1995 to 2001. It does not, however, include the money that businesses have spent on new machines to replace older ones that have date glitches, which economists say could provide some long-term economic benefits through productivity gains.

The Commerce estimate also doesn't take into account firms' Y2K-related publicity campaigns or the possible cost of litigation stemming from undiscovered glitches. As a result, some economists believe overall Y2K spending probably is somewhat higher, perhaps closer to $150 billion.

By contrast, it cost $15.5 billion to rebuild South Florida after 1992's Hurricane Andrew, the most costly natural disaster in U.S. history.

The department's estimate, however, is significantly lower than previous predictions of Y2K costs. Two years ago, when information was far sketchier, the Gartner Group consulting firm issued a widely quoted report that said costs could reach $300 billion.

The Commerce estimate ``gives us a strong factual underpinning for the discussions that have gone on for the last few years with some abstraction,'' said John Koskinen, chairman of the President's Council on Year 2000 Conversion.

Economists say Y2K spending, instead of slowing the economy, might actually be having a positive short-term impact by creating new jobs for programmers and greater demand for hardware and software.

``At the margins, it has made the economy slightly stronger last year and this year,'' said William Dudley, chief U.S. economist at investment bank Goldman Sachs & Co.

But over the long run, the $100 billion spent on Y2K repairs will create little lasting economic benefit. It's the digital equivalent of patching a flat tire: The fixed tire will work, but the tread is no newer.

``Billions of dollars have been diverted from other uses to fix the problem,'' Commerce Secretary William Daley said. But, he added, ``The greatest cost to our economy is behind us,'' he said.

[Global repercussions to come anyone? *Sigh*]

-- Diane J. Squire (sacredspaces@yahoo.com), November 19, 1999


Figures and excerpts from government's latest Y2K report
The Associated Press
Wednesday, November 17, 1999

http://www.sfgate.com/cgi-bin/ article.cgi?file=/news/archive/1999/11/17/national1754EST0792.DTL

[Fair Use: For Educational/Research Purposes Only]

(11-17) 14:54 PST Information from the latest report from the Commerce Department on the effects of the Year 2000 technology problem on the nation's economy.

Spending on the Year 2000 technology problem:

--Total U.S. repair bill: $100 billion

--Fortune 500 companies repair bill: $50 billion

--U.S. banks repair bill: $9 billion

--Federal government repair bill: $8.4 billion

--State and local governments repair bill: $5 billion

--White House Y2K crisis center price tag: $50 million

Excerpts from the report:

--''It is our best judgment that Y2K problems will not be of sufficient size or scope to have more than a transient effect on U.S. economic growth.''

--''The major U.S. trading partners of Canada, Mexico, Europe, and Japan, where information technology plays a large role in the economy, report a strong degree of preparation and Y2K readiness.'' [Side Link: CANADA a Y2K Threat to the US?? ]

--''A sudden rise in risk aversion associated with Y2K concerns translated into unusual demand for cash or household goodscould prove disruptive to finance and commerce even with advance preparation. Current polls, however, suggest that the public is becoming less worried about Y2K as the date approaches.''

-- Diane J. Squire (sacredspaces@yahoo.com), November 19, 1999.

With approximately 50 billion lines of code to look through at the average going rate of $1.50 per line, we either got one hell of a deal or we didn't look at every line. And that's not counting imbeddeds.

Y2K will be just a bimp in the road.

Inspector Clue So

-- Inspector Clue So (iclueso@spin.gov), November 19, 1999.

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